-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JIaQ19nnCpON2e5+Q0ashJvwX9Ky2pfgwgC7gE5eHHBTg8RZpgtMLIOmYUJIszaH XmG3aYJkInzhc3VIEG9ZAQ== 0001157523-06-001318.txt : 20060209 0001157523-06-001318.hdr.sgml : 20060209 20060209072045 ACCESSION NUMBER: 0001157523-06-001318 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060209 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060209 DATE AS OF CHANGE: 20060209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: K SWISS INC CENTRAL INDEX KEY: 0000862480 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 954265988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18490 FILM NUMBER: 06590875 BUSINESS ADDRESS: STREET 1: 31248 OAK CREST DRIVE CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 BUSINESS PHONE: 8187065100 MAIL ADDRESS: STREET 1: 31248 OAK CREST DR CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 8-K 1 a5075990.txt K-SWISS INC., 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of the Securities Act of 1934 Date of Report (Date of earliest event reported) February 9, 2006 K-SWISS INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-18490 95-4265988 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 31248 Oak Crest Drive, Westlake Village, CA 91361 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) 818-706-5100 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) N/A - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On February 9, 2006, K-Swiss Inc. (the "Company") issued a press release announcing its results of operations and financial condition for the three and twelve months ended December 31, 2005. A copy of the Company's press release is attached as Exhibit 99.1 to this report and is incorporated herein by this reference. The information in this Current Report on Form 8-K, including Exhibit 99.1 hereto, is being furnished under Item 2.02 "Results of Operations and Financial Condition." Such information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference in any filing, registration statement or other document filed under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits. (d) Exhibits. Exhibit Number Description of Exhibit -------------- ---------------------- 99.1 Press release issued February 9, 2006. 2 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. K-Swiss Inc. Date: February 9, 2006 By: /s/ GEORGE POWLICK ------------------------------------------ George Powlick, Vice President Finance, Chief Operating Officer, Chief Financial Officer and Director 3 EXHIBIT INDEX ------------- Exhibit Description - ------- ----------- 99.1 Press Release dated February 9, 2006. 4 EX-99.1 2 a5075990ex99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 K-Swiss Reports Fourth Quarter Results WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Feb. 9, 2006--K-Swiss Inc. (NASDAQ/NM:KSWS) today announced results for the fourth quarter and year ended December 31, 2005. Financial Highlights Net earnings for the fourth quarter of 2005 were $11,557,000, or $0.33 per diluted share, compared with $15,614,000, or $0.43 per diluted share, in the prior-year period. Net earnings and net earnings per diluted share for the year ended December 31, 2005, increased 5.6% and 7.7%, respectively, to $75,248,000, or $2.11 per diluted share, compared with $71,251,000, or $1.96 per diluted share, at December 31, 2004. In the fourth quarter of 2004, pursuant to the American Jobs Creation Act of 2004, the Company repatriated dividends of $22,700,000 related to foreign subsidiary earnings which were not considered indefinitely invested. The Company received an 85% dividends received deduction for eligible dividends, resulting in a tax benefit of $3,518,000 for the fourth quarter of 2004 and a lower effective tax rate of 28.7% for the year ended December 31, 2004. The repatriation yielded a one-time benefit of $0.20 per share for both periods. For the fourth quarter of 2005, total worldwide revenues increased 4.5% to $92,289,000 compared with $88,356,000 in the prior-year period. Domestic revenues decreased 5.9% to $64,327,000 in the fourth quarter, and international revenues increased 40.0% to $27,962,000. Total worldwide revenues for 2005 increased 5.1% to $508,574,000 compared with $484,079,000 in 2004. Domestic revenues decreased 4.3% to $380,478,000 in 2005, while international revenues increased 47.8% to $128,096,000. Futures Orders Worldwide futures orders with start ship dates from January through June 2006 decreased 2.8% to $217,895,000 at December 31, 2005, compared with $224,233,000 at December 31, 2004. Domestic futures orders decreased 12.7% to $148,698,000 at December 31, 2005, from $170,291,000 at December 31, 2004. International futures orders increased 28.3% to $69,197,000 at December 31, 2005, from $53,942,000 the previous year. Stock Repurchase Program The Company purchased approximately 30,000 shares of Class A Common Stock during the fourth quarter of 2005 for a total expenditure of approximately $1,000,000 as part of its stock repurchase program. At December 31, 2005, there remains authorization to repurchase approximately 4,111,000 shares under the Company's existing stock repurchase program. Since August 1996, K-Swiss has purchased a total of 25.3 million shares of Class A Common Stock for a total expenditure of $163.3 million. Earnings Guidance K-Swiss also issued guidance for the first quarter of 2006 and full year 2006. The Company expects revenues for the first quarter of 2006 to be approximately $148 to $153 million and earnings per diluted share to be in the range of $0.63 to $0.68. The Company expects full year revenues to be approximately $480 to $500 million and expects to report full year earnings per diluted share of approximately $1.70 to $1.85. The Company's estimates for the first quarter of 2006 and full year 2006 reflect the continued investments in marketing, sales and product development for the Royal Elastics brand as well as the expansion of European operations. The estimates are based upon the following assumptions: gross margins will be approximately 46%; SG&A will not rise above $37 million for the first quarter of 2006 or $139 million for the full year 2006; customer order cancellations will be moderate; and the Company's growth initiatives with respect to Royal Elastics will not exceed a net loss of $0.08 per share for the full year. Steven Nichols, Chairman of the Board and President, stated, "We are pleased with the better-than-expected revenues and earnings in the fourth quarter. Despite the large one-time gain from the Jobs Creation Act tax repatriation in 2004, we were able to deliver respectable year-over-year growth on continued improvement in margins and strong international sales. "In 2006, we do not expect as rosy an outlook as we have enjoyed of late. Based on early indications of third quarter order patterns, we expect year-over-year declines in domestic sales during the second half of the year. We are taking steps to reignite the growth in our domestic business. However, given the timing of the development cycle, the impact from these changes would not be felt until later." Investor Conference Call and Web Simulcast K-Swiss will conduct a conference call on its fourth quarter 2005 earnings release on February 9, 2006, at 11:00 a.m. EST. The number to call for this interactive teleconference is (913) 981-5509. A replay of this conference call will be available until February 16, 2006, by dialing (719) 457-0820 and entering the passcode, 8904628. The Company will also provide an online Web simulcast and rebroadcast of this conference call. The live broadcast of K-Swiss' quarterly conference call will be available online at www.streetevents.com and www.earnings.com on February 9, 2006, beginning at 11:00 a.m. EST. The online replay will follow shortly after the call and continue through February 23, 2006. K-Swiss Inc. designs, develops and markets an array of athletic footwear for high performance sports use, fitness activities and casual wear under the K-Swiss brand. The Company also designs and manufactures footwear under the Royal Elastics brand. Royal Elastics, a wholly owned subsidiary, is the leading innovator of slip-on, laceless footwear. Certain matters discussed in this press release are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not limited to: non-achievement of the assumptions discussed herein, general and regional economic conditions, industry trends, merchandise trends, including market acceptance of the Company's training shoe and new Limited Edition lines, and Royal Elastics brand, market acceptance of the Company's casual product in Europe, customer demand, competition, the impact of terrorism and/or a potential global conflict on the worldwide economy, dependence on large customers and credit concentrations and order cancellations and reduced sales resulting from a slower worldwide economy. A complete description of these factors, as well as others which could affect the Company's business, is set forth in the Company's periodic filings, including its Form 10-K for the year ended December 31, 2005, which is currently on file with the SEC. "Backlog" as of any date, represents orders scheduled to be shipped within the next six months. Backlog does not include orders scheduled to be shipped on or prior to the date of determination of backlog. The mix of "futures" and "at-once" orders can vary significantly from quarter to quarter and year to year and, therefore, "futures" are not necessarily indicative of revenues for subsequent periods. K-Swiss Inc. Consolidated Statements of Earnings (In thousands, except earnings per share data) Three Months Ended Year Ended December 31, December 31, ------------------- ------------------- (Unaudited) 2005 2004 2005 2004 -------- -------- -------- -------- Revenues $92,289 $88,356 $508,574 $484,079 Cost of goods sold 49,304 48,404 271,212 262,859 -------- -------- -------- -------- Gross profit 42,985 39,952 237,362 221,220 Selling, general and administrative expenses 28,766 28,342 130,144 122,262 -------- -------- -------- -------- Operating profit 14,219 11,610 107,218 98,958 Interest income, net 1,242 486 3,333 1,038 -------- -------- -------- -------- Earnings before income taxes 15,461 12,096 110,551 99,996 Income tax expense (benefit) 3,904 (3,518) 35,303 28,745 -------- -------- -------- -------- Net earnings $11,557 $15,614 $75,248 $71,251 ======== ======== ======== ======== Basic earnings per share $0.34 $0.45 $2.20 $2.04 ======== ======== ======== ======== Diluted earnings per share $0.33 $0.43 $2.11 $1.96 ======== ======== ======== ======== Weighted average number of shares outstanding Basic 34,163 34,473 34,220 34,917 Diluted 35,430 36,073 35,626 36,433 K-Swiss Inc. Condensed Balance Sheets (In thousands) December 31, 2005 2004 -------- -------- ASSETS CURRENT ASSETS Cash and cash equivalents $197,464 $144,857 Accounts receivable, net 42,411 49,411 Inventories 61,164 64,901 Prepaid expenses and other current assets 7,446 7,710 Deferred taxes 4,224 4,654 -------- -------- Total current assets 312,709 271,533 PROPERTY, PLANT AND EQUIPMENT, NET 8,016 8,228 OTHER ASSETS Intangible assets 4,700 4,700 Deferred taxes 4,810 5,305 Other 5,963 5,111 -------- -------- 15,473 15,116 -------- -------- $336,198 $294,877 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank lines of credit $ -- $6,750 Trade accounts payable 19,654 22,262 Accrued liabilities 27,232 23,952 -------- -------- Total current liabilities 46,886 52,964 OTHER LIABILITIES 13,991 15,083 STOCKHOLDERS' EQUITY 275,321 226,830 -------- -------- $336,198 $294,877 ======== ======== CONTACT: K-Swiss Inc., Westlake Village George Powlick, 818-706-5100 -----END PRIVACY-ENHANCED MESSAGE-----